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Charles Arlinghaus: Medicaid expansion will be the biggest issue of 2014

BY CHARLES M. ARLINGHAUS

One of the middle chapters of New Hampshire's Medicaid expansion saga just concluded without resolution. A potential pseudo-compromise crashed and burned largely on the basis of politics. But both sides hope to reach agreement in January. If a compromise to this saga comes in January, it should offer something to conservatives and liberals alike and not merely replay the politics of this fall.

One of the central supports of the federal health care law known as Obamacare is a significant expansion to the state-run Medicaid programs. The Supreme Court ruled last year that states must be given an initial choice to opt-in or opt-out of the program.

After a half-hearted commission over the summer endorsed the same plan presented to it on the first day, the governor called a November special session to try and resolve the issue. While the governor and the Democratic House majority generally support the same plan, a narrow Republican Senate majority does not. The special session was meant to find a compromise.

The Senate Republican leadership and the House and governor offered plans so similar as to be called Tweedledum and Tweedledee by some observers (OK, that was me). There were differences that were apparently vitally important to both parties, but not to most observers.

Nonetheless, inside the crucible of politics, differences are magnified. Policy is rarely as important as politics. The plan effectively died the weekend before the final vote. The governor, in campaign mode, called the GOP plan "worse than no deal at all." She then proceeded, oddly, to campaign in the districts of and attack the senators who were pushing the Senate hardest to offer a deal that gave her the lion's share of what she wanted. So the deal died.

The policy machinations here are different from the political fight. Medicaid is currently not a program for low-income citizens, but rather a program with varying income restrictions, some quite high, that covers only people in certain categories.

The administration would like to change Medicaid so that it covers everyone below certain income levels. The newly eligible population would consist mostly of childless adults who are currently not covered at any income level (nor are they covered by most other social policy programs).

Current Medicaid enrollment averages 135,000 people. Both the Senate and House plans would have expanded coverage to an estimated additional 100,600 people in slightly different but remarkably similar ways. Cost estimators predict that only 40,000-70,000 new people would adopt the new plan, but stress that their estimates can't be relied on for budgeting purposes.

Compromise is possible because of areas of broad agreement, but difficult because of specific areas of concern.

There is a majority in neither legislative chamber to just say no. The House would pass an Obamacare expansion as-is with no adjustment. A sizeable Senate majority of all the Democrats and slightly less than half the Republicans wants to "at least do something," but there are limits on what a majority of them will do.

The most important goal for the liberals who support generic expansion is to cover the poorest individuals currently without coverage. Conservatives worry about increasing enrollment from 135,000 today to 200,000 or more both from a financial standpoint and from a reform standpoint.

If Medicaid is transformed from a categorical program into a low-income program, is it possible to do it in a way that keeps enrollment at the current 135,000 but targets resources to those at the lower income levels? Yes. In fact, the governor proposes doing this with one eligibility category: the Breast and Cervical Cancer Program. The poorest individuals would be covered through Medicaid and those at higher incomes would be covered differently. But such a change would require permission from the federal government, as any change does.

The federal government would prefer not to give us permission to do anything different. But, unusually, we have bargaining power. The federal government is very eager that we expand coverage eligibility to the additional 100,000 people and that allows us to ask for reforms.

We can ask for a system that establishes patient-centered accounts, as the Healthy Indiana Program does. We can also ask for the ability to charge means-tested premiums so that Medicaid coverage mirrors the rules for the exchange and the ones most private insurance has.

Compromise could be found that covers the people the left wants covered and offers some budget and reform measures for the right. But such a compromise will take more than a couple weeks and can be easily destroyed by political gamesmanship.

Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord.